July 18, 2011

Reinstating Liberty Would Cost How Many Jobs?

James Pethokoukis has some substantive ammo against the claim that "Cutting spending by $111 billion, as some Republicans want to do, would cost the economy 700,000 jobs."

Now I will admit that I am not sure if those are jobs somehow not created, jobs somehow not saved or what exactly.

But the basic point is that less government spending means fewer jobs. But to believe that, you also have to believe that more government spending means more jobs.

Jimi P shares some data on both sides and comes down squarely in the "bull****" camp:
I have expressed my doubts about this before, as has economist John Taylor who, after examining data as opposed to models, concludes this about the Obama stimulus (bold is mine):
Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers. Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.

Have to agree with his conclusion: "Kill jobs? The GOP plan would potentially be a powerful job creator."

The point essentially becomes a referendum on Keynesianism. David Boaz reminds (in a different context):

Everybody talks about the return of Keynesianism these days. We've ratcheted up federal spending in a vain attempt to put people back to work. But Lord Keynes himself suggested that 25 percent of GDP was the "maximum tolerable proportion" that the government should take. And total government spending in the United States is already around 39 percent and headed up if we don't make changes. We are creating an unaffordable and economically destructive transfer state.

Economics and Markets Posted by John Kranz at July 18, 2011 3:04 PM

"Cutting spending by $111 billion, as some Republicans want to do, would cost the economy 700,000 jobs."

I have no problem with that, assuming it's public-sector jobs - bureaucrats, apparatchiks, welfare workers, DMV drones, BATF gunwalkers, IRS martinets, and the vast army of other slugs drinking from the government trough - that we're talking about. Imagine the powerhouse of the American economy, fueled by this addition of laborers suddenly having to find something useful and productive to do in order to survive!

Posted by: Keith Arnold at July 18, 2011 4:21 PM

I can think of 535 folks we could live without...

Posted by: jk at July 18, 2011 4:29 PM

Yes, but how many of those 535 could compete for productive jobs? Can you honestly imagine Sheila Jackson Lee, Henry Waxman, Barbara Boxer, or several hundred of those in this sample, seeking employment in this economy? Cruel man, you would force these people into bread lines and soup kitchens.

I can see myself hiring a downsized IRS desk jockey to do my bookkeeping, or maybe collections; for members of Congress, though, we'd gain by their firing (getting their hands off the controls), but not the secondary goal of turning them into productive members of society. I'm not convinced many of them have that ability.


Posted by: Keith Arnold at July 18, 2011 6:30 PM | What do you think? [3]